Hero Enterprise Chairman Sunil Munjal feels impact investing must bridge the gap between the top and the bottom of the pyramid to quell social unrest as well as foster growth

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Sunil Munjal wants to improve the lives of artisans and connect them with markets in India and overseas

Image: Amit Verma

When it comes to impact investing, Sunil Munjal, chairman of Hero Enterprise, is the newsmaker of 2017. In April, Munjal wrote a cheque of ₹100 crore to Aavishkaar, an early-stage, social venture capital firm. The investment, dubbed the biggest such by an Indian HNI, was part of Aavishkaar’s ₹2,000-crore Aavishkaar Bharat Fund to bankroll startups as well as other companies that operate in sectors such as agriculture, financial services, renewable energy and health care.

The 57-year-old entrepreneur, who moved out of his family’s flagship company Hero MotoCorp in 2016, is also a votary of India’s traditional arts and crafts. “If it can be branded and positioned appropriately, it will truly build India’s soft power,” Munjal tells Forbes India in an interview. Excerpts:

Q. The buzz is that you signed the single biggest impact investment cheque among Indian HNIs. What made you invest in Aavishkaar? Frankly, I didn’t realise I was doing that. The idea is simple. For us, as a nation, there is a need to grow all of India. You’ll see that, over the last 20 to 30 years, India has done exceedingly well at the top [of the pyramid]. But the gap between the top and the rest has grown dramatically. There are many [citizens] who still do not have access to basic opportunities in the areas of education, health care, clean drinking water, etc. Aavishkaar has a track record of investing in enterprises that work in those areas and in a manner that is both profitable and sustainable. So, it looked like a perfect place to invest in.

That said, our family foundations and trusts [the Munjal family] have been supporting some of these areas through our own initiatives. In this, we don’t look for profit and don’t take a penny back. But, as a philosophy, we never announce what we do. Of late, we have had a lot of pressure and have done some rethinking ourselves—a reason why I’m talking to you—that it may be good for people to see and learn.

Q. What is your idea of impact investing? First, the [business] idea itself must be one that has a huge social impact, otherwise it doesn’t count for impact investing. Besides, when I look at impact investing, it essentially has to help in the capacity-building of individuals, communities, societies, villages, etc. Or it has to provide a product or service that will enhance the quality of life for the individuals involved and also help create livelihood for them.

That said, there are two ways to look at impact investing. The private sector must invest in any business that gives a return, and those businesses that do not give a return should be taken care of by the government. But now there is a third category of private enterprises and individuals investing in areas, which are normally not seen as pure businesses which have a significant positive impact on society and people, and where there are returns that may take longer. To my mind, this is a perfect junction of meeting the needs of society.

We have to develop all of India for two different reasons. One, if you do not start to address those areas that are getting left behind, you could have social unrest. Plus, if you can fix some of those areas, you could develop the world’s largest growth market. Both are good reasons for us to look at impact investing as an essential tool to bridge the gap.

Q. Do you think listed entities should set aside money from their CSR corpus for impact investing?CSR by its very nature means that you are not making an investment. It’s money that you give away; in a sense, it is philanthropy from a company. CSR money cannot replicate or make up for [the lack of] impact investments. But it is important because there are many areas in which you will never be able to get a return on your investment. If you look at sanitation, for example, you can’t turn that into a business. You invest in building a toilet and leave it there.

“ We inherited one of the richest cultural legacies in the world, but have lost about 30% of our cultural heritage.

Q. What role do you see yourself playing in the impact investing space in India. Do you have an investment outlay?I will not get into discussing numbers (laughs). Even the ₹100 crore was announced almost under duress. I wouldn’t have liked to make that figure public.

About four years ago, we set up a foundation that looks at traditional arts, craft and culture. As a nation, we are losing our inheritance. We inherited one of the richest cultural legacies of the world. But, according to reports, over the last 30 years, we have lost about 30 percent of our cultural heritage [in arts and craft]. Because it’s not remunerative, young people are getting away from it.

More recently, we organised a festival called the Serendipity Arts Festival in Goa [in December] where we combined all sorts of traditional Indian art forms, like theatre, music, food, street art, etc. We did it last year [2016] too and got a footfall of about 100,000.

Now I’m trying to see if we can revive some of these declining arts and craft forms and help bring some patronage for them. If we can attempt to help the artisans with design and process inputs, and help connect them with markets both in India and overseas. Also, see if there is a possibility to build sustainable livelihoods for them and their families. If we can do that, we have the potential to create the largest job opportunity this nation has ever seen.

Q. Companies like Fabindia and Jaipur Rugs have built scalable and profitable social business models that touch the lives of rural artisans. How different would your approach be?These are brilliant companies. And there are many more like them that are working on a smaller scale. It’s just that for a large nation like India, where millions are involved in the arts and craft industry, there is space for, say, even 50 more companies.

If you go back in history, the patrons of art used to be royalty. At some point, the government became the patron and it has done what it could do. But it’s not enough. Today, we are using ecommerce to reach out to customers around the world. Why should our traditional arts and craft sector not have access to this? If it can be branded and positioned appropriately, it will truly build India’s soft power.

(This story appears in the 19 January, 2018 issue of Forbes India. You can buy our tablet version from Magzter.com. To visit our Archives, click here.)